Annotations have their use, but they are not the one silver bullet to kill XML configuration. I recommend mixing the two!
For instance, if using Spring, it is entirely intuitive to use XML for the dependency injection portion of your application. This gets the code's dependencies away from the code which will be using it, by contrast, using some sort of annotation in the code that needs the dependencies makes the code aware of this automatic configuration.
However, instead of using XML for transactional management, marking a method as transactional with an annotation makes perfect sense, since this is information a programmer would probably wish to know. But that an interface is going to be injected as a SubtypeY instead of a SubtypeX should not be included in the class, because if now you wish to inject SubtypeX, you have to change your code, whereas you had an interface contract before anyways, so with XML, you would just need to change the XML mappings and it is fairly quick and painless to do so.
I haven't used JPA annotations, so I don't know how good they are, but I would argue that leaving the mapping of beans to the database in XML is also good, as the object shouldn't care where its information came from, it should just care what it can do with its information. But if you like JPA (I don't have any expirience with it), by all means, go for it.
In general:
If an annotation provides functionality and acts as a comment in and of itself, and doesn't tie the code down to some specific process in order to function normally without this annotation, then go for annotations. For example, a transactional method marked as being transactional does not kill its operating logic, and serves as a good code-level comment as well. Otherwise, this information is probably best expressed as XML, because although it will eventually affect how the code operates, it won't change the main functionality of the code, and hence doesn't belong in the source files.
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